To the average person the mounting debt being accumulated by the Federal Government is a clear and present danger. According to nationwide polls this is the second most important issue confronting voters. One of the biggest spending areas that appears out of control is the subsidies for the mortgage market. At present most of these costs are being kept off of the Federal books despite the complaints of the CBO and Republican legislators. Ironically sometime before March 31st the Federal Reserve needs to convince someone other than the Federal Reserve to buy the mortgage backed securities. I doubt Mr. Geithner reassured prospective investors with these explanations. It should be interesting to see how high an interest rate will be required to move these securities. Will they resort to selling these securities at speculative rates just to move the securities into private hands? How could a fund manager consider investing in these speculative mortgage backed securities when the Obama administration’s plan is to ignore critical mortgage problems until 2011?
AP – The Obama administration will wait until 2011 to propose an overhaul of mortgage giants Fannie Mae and Freddie Mac, Treasury Secretary Timothy Geithner said Wednesday, arguing that he wanted to put some distance between a new system and what he called "the worst housing crisis in generations."
Geithner: No change to Fannie, Freddie until 2011 (AP)
Wed, 24 Feb 2010 21:27:04 GMT